TCF Financial fined $10M for lapses in monitoring

The Office of the Comptroller of the Currency, which announced the fine Friday, said it was concerned about cash transactions that appeared to be manipulated, as well as wire transfers where the source and purpose of the funds weren't known.

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By Associated Press

Crookston Times - Crookston, MN

By Associated Press

Posted Jan. 28, 2013 at 7:00 PM

By Associated Press

Posted Jan. 28, 2013 at 7:00 PM

Minneapolis, Minn.

TCF Financial Corp. has been fined $10 million for failing to adequately monitor suspicious bank transactions, including some with possible links to terrorism.

Federal officials accused the Wayzata bank of failing to comply fully with the Bank Secrecy Act, which requires financial institutions to make sure they aren't used to launder money, the Minneapolis Star Tribune reported (http://bit.ly/TD8e1a ).

The Office of the Comptroller of the Currency, which announced the fine Friday, said it was concerned about cash transactions that appeared to be manipulated, as well as wire transfers where the source and purpose of the funds weren't known.

Regulators have stepped up enforcement of the Bank Secrecy Act in recent years. Last month, British banking giant HSBC agreed to pay $1.9 billion to settle allegations of laundering money for Mexican drug cartels and countries under U.S. embargoes, such as Iran.

TCF, Minnesota's third-largest bank with $19 billion in assets, was accused of being late to file 2,357 reports of suspicious orders between 2008 and 2010. Regulators highlighted 13 cases, involving about $7.2 million, in which the lender failed to properly file reports "related to transactions indicative of possible terrorist financing," according to the consent order.

The reports were of "poor quality," it said. In some cases bank officials didn't check the "terrorist financing" box on reports even though the narrative section referenced possible terrorist activity, and in other cases the narrative didn't explain what sort of suspicious activity had occurred.

TCF, which agreed to pay the fine, also agreed to refile the 13 reports and conduct employee training.

The lender issued a statement Friday saying it had overhauled the manner in which it complies with the Bank Secrecy Act.

Bank officials have done a "very, very thorough examination of all our accounts," TCF spokesman Jason Korstange said. "Ultimately we did not find any terrorist activities."

Nancy Bush, a banking industry analyst, said she thought TCF's $10 million fine was so small that it appeared to be a symbolic gesture. She added that banks haven't taken suspicious activity reports seriously enough, and that tougher enforcement is needed.

"Banks have every way in the world to track this stuff," Bush told the newspaper. "They certainly know what comes in and what goes out of their banks on a daily basis."

The settlement may help explain letters the bank hsent last month to about a dozen Iranian students at the University of Minnesota. The letters warned that TCF might close their accounts, triggering concerns that innocent people were being profiled.

Korstange said the bank has only closed Iranian student accounts that were dormant.